In September 2014, a California woman named Linda Rubenstein sued Neiman Marcus over allegedly misleading price tags at their “Last Call” line of stores. In the case, Rubenstein alleged that the company misled consumers at its Last Call stores with prices tags that listed a cost “compared to” a fictitious higher price, designed to lure shoppers into thinking they are getting a deal.
In December of 2014, U.S. District Judge S. James Otero dismissed Rubenstein’s suit with leave to amend, for failure to state a claim and failure to allege fraud with particularity. Just last week, her putative class action revived when a Ninth Circuit panel agreed that a lower court prematurely tossed her case. The panel found that Rubenstein had sufficiently alleged her false advertising and unfair business practices claims by showing that Neiman Marcus may have made misleading statements about its Last Call merchandise.
“For advertisers, responding to allegations of false advertising can be an expensive task that consumes resources the advertiser would often prefer to use in other ways,” she explained. “The final resolution of such cases may require the advertiser to make financial payments and to change its business practices in specific ways on a go-forward basis.” In the Neiman Marcus case, the plaintiff asserts that the “compare-to” price tags on items in Neiman Marcus’ Last Call stores are deceptive because they believe that the retailer can’t show that the same or similar items were offered by either Neiman Marcus stores or competitor stores at that compare-to price. So, the District Court dismissed the case because it agreed with Neiman Marcus that the plaintiffs’ complaint didn’t describe the alleged deception in sufficient detail.
How can customers protect themselves from False Advertising?
From a consumer perspective, in Pagar’s opinion, the critical issue is for consumers are to keep themselves informed about the products that they purchase. Consumers should research the products they want to buy and understand what the quality issues are, what the pricing range is, and where the items are available for purchase.
She added, “Pricing issues are one area where consumers have an excellent ability to make prudent marketplace decisions for themselves. All they need to do is comparison shop – online, offline, with a comparison shopping app, or via other mechanisms – to understand what item they are purchasing and how they personally want to value each item.”